Muvhango Lukhaimane, Pension Funds Adjudicator
There has been an upward trend in new complaints reaching the Office of the Pension Funds Adjudicator (OPFA), moving towards pre-Covid levels.
New complaints received for 2022/23 saw an increase of 4% when compared to the previous year and a substantial 26% when compared to 2020/21 i.e., during the pandemic when lockdowns were implemented.
The rise in new complaints, according to Pension Funds Adjudicator Muvhango Lukhaimane, may be attributed to two things: complainants are aware of the OPFA, the function that it serves and the level of trust that complainants have in the OPFA to fulfil its mandate; and retirement funds are simply not doing enough to resolve disputes internally.
In the 2022-2023 fiscal year under review, the OPFA received a total of 9190 complaints. Notably, electronic and online channels accounted for 77% of the complaints, while walk-in complaints constituted 18%, with only 5% received through postal services. 2559 complaints were carried over from 2021/2022.
A total of 7809 complaints were finalised during the reporting period, reflecting a 7% decrease compared to the previous financial year. Among these finalised complaints, 56% (4368) were resolved through investigations and reasoned determinations, while 1382 cases were settled. An additional 1326 complaints were deemed to be outside the jurisdiction of the office (mostly for being out of time), and 733 complaints were resolved through alternative means. 82% of the cases were finalised within six months of receipt.
As of 31 March 2023, 3970 complaints were active of which only 4% exceeded six months.
According to Ms Lukhaimane, there was an increase in complaints lodged via the self-serve function on the OPFA website following its launch on 12 December 2022. This facility enables complainants to track the progress of their complaint on the website through the different investigation steps.
The highest number of complaints came from Gauteng province (46 %). The OPFA’s offices are situated in Gauteng only and this could be a contributing factor, together with the fact that there is higher coverage of pension fund-related matters by various media in Gauteng. The second highest province is Mpumalanga with 9%.
The recently implemented “Refer to Fund” process wherein the OPFA acts as a facilitator for dispute resolution between funds and complainants has yielded positive results. A total of 620 complaints were successfully concluded through this process. The OPFA will continue to encourage parties to harness the benefits of this process, particularly because of its quick turnaround time and overall value added to fund/member relationships.
Similar to previous years, the primary concerns by complainants pertained to withdrawal benefits and non-compliance with section 13A of the Pension Funds Act, where employers neglect to contribute to pension funds. Jointly, these two categories constitute 84% of the total closed complaints. Almost 50% of these types of complaints arise from members of the Private Security Sector Provident Fund (PSSPF).
“The persistence of these issues and the significant volume of complaints are causes for substantial concern.
“Stakeholders are strongly encouraged to address and rectify this undesirable outcome, stemming from inadequate fund governance, management, and administration.
“If left unaddressed, this situation effectively undermines the government’s endeavours to enhance trust, coverage, adequacy, and sustainability within the retirement funds system,” said Ms Lukhaimane.
The establishment of the Ombud Council, as a regulatory entity for ombud schemes, aims to enhance the independence, access, and fairness of the alternative dispute resolution process for financial sector-related complaints.
“The Financial Services Tribunal (FST) is a fee-free appeals avenue for aggrieved persons wishing to challenge or review the Pension Funds Adjudicator’s determinations.
“The increased use of the FST by aggrieved persons is encouraging. Complainants now have access to an efficient appeals process, at little to no cost compared to the expensive and lengthy, formal court process,” Ms Lukhaimane said.
During the reviewed year, 72 applications for reconsideration were submitted by individuals dissatisfied with OPFA decisions. The FST issued a total of 69 decisions, with 37 OPFA decisions being upheld and 32 being sent back for reconsideration.
Less than 1% of the issued determinations were remitted based on the same facts, while the remainder resulted from new evidence presented by the aggrieved party during the FST proceedings, which had not been presented before the OPFA.
With around 77% of complaints received through digital platforms and all being processed internally through ICT systems, the OPFA continues its digital transformation agenda, prioritising the modernisation of systems used to deal with complaints and improving internal operations whilst enhancing the ICT Infrastructure and security.
Membership of the PSSPF is compulsory in the private security sector by virtue of a collective agreement, and this fund remained the largest contributor to new complaints. The requirement for compulsory membership in the PSSPF is questionable as several employers fail to comply with the requirement to pay contributions.
“Furthermore, the fund does not appear to be achieving its purpose of providing retirement benefits since the majority of its members do not remain in the fund until retirement age given the nature of the occupation.
“The PSSPF has also failed to allocate hundreds of millions of rands in contributions paid by employers leading to utter frustration for employers and members. It does not seem as if there is a plan to bring the allocation of contributions up to date, anytime soon,” Ms Lukhaimane said.
In a message to the Annual Report, Minister of Finance Enoch Godongwana offered his gratitude to Ms Lukhaimane for ensuring the reforms that affect ombud schemes are a success.
“In addition, I would also like to thank and congratulate the OPFA team, for the 25-year anniversary and the consistent performance achieved throughout this period,” he said.
Download the full OPFA Integrated Report 2022-2023
ABOUT THE PENSION FUNDS ADJUDICATOR
The Office of the Pension Funds Adjudicator (OPFA) is a statutory body established to resolve disputes in a procedurally fair, economical and expeditious manner. The adjudicator’s office investigates and determines complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty in respect of pension funds. The OPFA is situated in Pretoria, Gauteng.